For some company leaders, corporate culture might seem too touchy-feely — a vague concept that, when competing for time and resources, will quickly fall below other business strategies with more tangible metrics. In reality, organizational culture has everything to do with company success, from employee retention to a business’s profitability and bottom line.
Gallup found that employee engagement skyrocketed, in some cases from less than 20% to more than 70%, in so-called “high-development cultures,” which Gallup defines as being initiated at the C-suite and board levels, and where managers are trained to develop team members based on their strengths and are held accountable when teams aren’t engaged. According to a survey of American workers by talent analytics platform Jobvite, among new hires who had left a job within the first 90 days, 32% quit because they didn’t mesh with their new employer’s culture. And organizations with top-rated cultures posted returns to shareholders 200% higher than those with the worst corporate climates, according to McKinsey & Company.
Cultivating corporate culture, however, takes work. Leaders can’t just offer perks like snacks in the breakroom, a casual dress code, and virtual happy hours and call it done. Workplace culture is about no longer paying lip service to your company’s values, such as integrity, innovation, or respect, and turning them into concrete practices that have real impact for your employees, said Erica Keswin, workplace strategist and author of Rituals Roadmap: The Human Way to Transform Everyday Routines Into Workplace Magic.
“Corporate culture is really the personality or the soul of an organization...the articulation of a company’s shared beliefs and values,” Keswin said.
How to Define Culture
Massachusetts Institute of Technology researchers found dozens of definitions of corporate culture in academic literature. But when they analyzed more than 560 companies’ corporate culture statements, a common definition emerged: “A set of norms and values that are widely shared and strongly held throughout the organization.”
And not only are they shared, according to a Harvard Business Review article entitled “The Leader’s Guide to Corporate Culture,” they’re also pervasive, enduring, and implicit. Organizational culture is a long-standing pattern of behaviors, mindsets, and shared values that filter throughout the ranks of all employees.
The 4 Main Types of Organizational Culture
Experts generally name four primary types of corporate culture. The Project Management Institute, the leading professional association for project managers, describes them in the following way:
- Clan: A mentoring, teamwork-driven workplace where coworkers are like a second family.
- Adhocracy: A dynamic, entrepreneurial atmosphere where risk-taking, creativity, and innovation are encouraged.
- Hierarchy: A company that values efficiency, stability, structure, governance, and formal rules.
- Market: A results-oriented organization that focuses on customers and suppliers and values productivity and success in the market.
Some companies may fit one of these descriptions perfectly. But Ashley Cox, founder and CEO of Human Resources consulting firm SproutHR, said leaders shouldn't get too bogged down in exactly matching the description of one of these archetypes. “I don't think it's as important to label the type of culture an organization has or desires to have as it is to clearly define what it is and how everyone can participate fully,” Cox said.
The Key Components of Corporate Culture
Every company has a culture regardless of what leaders have done — or haven’t done — to create it. On the negative side, some organizations turn a blind eye to bad behavior. Amid allegations of discrimination and harassment that eventually led to a federal investigation and fines, the New York Times called Uber’s culture “aggressive” and “unrestrained.” Meanwhile, Zappos is known for its happy employees and touts its culture as “fun” and a little weird. And Apple is known for its innovative and demanding culture where secrecy is paramount.
Effective organizational cultures are ones that companies design based on their values and that support their goals. “There’s going to be a culture whether you like it or not,” Keswin said. “So make it one that supports your business and your people and gives you the best shot at success.”
Organizational culture is complex and varies at every company, but it often centers on these four fundamental pillars:
1. Vision, Mission Statement, and Core Values
Together, these three elements build the foundation of a company’s desired culture. “Vision is what inspires and motivates the team to work toward a common goal,” Cox said. “Mission is how the team will achieve that goal or vision together. And core values are the way in which the team will work together to achieve the goal.”
MIT researchers uncovered 62 different values in their evaluation of more than 560 companies. Integrity, collaboration, customer, respect, and innovation rounded out the top five. When coming up with core values, some companies will list a dozen or more, Keswin said. For instance, before its negative headlines, Uber had 14 values. “That’s too many because who can remember 14 values? And values are supposed to drive behavior,” she said.
To Keswin, the sweet spot is no more than three to six corporate values. Home in on what values define the essence of your organization, she recommended. “It’s not what you do, but it really describes how you get things done."
2. Language and Rituals
Culture, as the Harvard Business Review noted, is pervasive, involving “collective behaviors” that trickle down to all aspects of the workforce. Those behaviors can include a common language — acronyms or catchphrases that can strengthen bonds between coworkers, for instance. When crafting the right language, the executive leadership team, in conjunction with Human Resources, should meet outside the scope of normal business, so the conversation can remain laser-focused, Cox recommended. From there, she said, they might consider questions like these:
- How do you talk about the business, your clients and customers, and one another?
- What is appropriate and acceptable? What isn't?
- What common language binds your team together and creates a sense of camaraderie?
The goal of the meeting is to come up with some general guidelines for crafting a shared language based on the culture they want to create, Cox said. Once the guidelines are drafted, company leaders and HR should then collaborate with their entire teams to create the actual language together, she recommended.
In the same way, rituals also can forge connections between coworkers and create community based on your organization's values. They can involve small gestures or big programs — from how you start meetings to how you develop your workforce or build community, Keswin said.
For example, Udemy, the online course provider, values learning and has their monthly DEAL hour, or “Drop Everything and Learn,” where people spend an hour taking an online class. Talent is LinkedIn’s top priority, and the professional networking platform provides its employees with a monthly InDay, short for Investment Day. On InDay, employees can focus on themselves, the company, and the world at large around monthly themes such as giving back, learning, and wellness and play, among others. And at fast food chain Chipotle, team members sit down for a morning meal together before stores open to connect as individuals, one of its core values, Keswin said.
Keswin encourages company leaders to think about opportunities where you can put your culture into practice and bring it to life in the organization.
3. Decision-Making Practices
How decisions are made is another key component of culture, Cox said. In some companies, every decision is made at the top. In others, it’s a more collaborative atmosphere where individuals are given more autonomy and drive decisions as part of a team. “All [cultures aren't] created equal,” she said. “But all have a place, depending on the type of business and the type of leadership that’s needed.”
4. People
Employees play a primary role in an organization’s culture. To maintain it, companies need to bring the right people on board. When interviewing prospective employees, companies should consider not only their skillset, but their cultural fit — how their personality and practices will mesh with the company’s unique culture.
Top of mind, said Stacy Schutte, cofounder of executive search firm Moxie Search Group, should be, “How do they fit into a group? Do they resonate with our culture? Are the things that are important to us, important to them?”
The right situation-based or behavioral questions can reveal the answers. “I think now, more than ever, interviews are becoming more personal,” said Ashley Nemeroff, also cofounder of Moxie Search Group. “Especially now that more of them are happening via Zoom, so we have to create that connection.”
Inquiries into what somebody did during COVID-19 lockdowns can be revealing, Nemeroff noted. Did they take a course or catch up with family, for example? Other questions can be more general, such as, “Share a time when you had to deal with a problem,” or “Give me an example where you handled feedback.”
“What we really try to do is create a relationship with our candidates where they feel more comfortable opening up so that we’ll know a little bit about them, what they stand for, and what’s important to them, and be able to find that right fit,” Nemeroff said.
As you hire for cultural fit, however, be careful not to hire people just like you, Schutte and Nemeroff cautioned. Hiring managers need to ensure they’re not defining ‘fit’ as a workforce populated by people with the same alma mater or fashion sense.
For Deren Tavgac, Chief Operating Officer of Cube, a data analytics software company, diversity is key when bringing in new hires. “I never hire people who are identical to me in skillset and personality,” he said. “The culture is more about how we succeed as a group...where you say, ‘This is what we need to accomplish. Are we aligned on the end goal?’”
How to Cultivate Corporate Culture
Building and maintaining a corporate culture requires intention and vigilance, Cox said. It’s important to be nimble and responsive. Here’s how to successfully cultivate corporate culture at your organization.
1. Listen to employees at all levels.
Don’t rely on annual corporate surveys to get feedback from your employees, Tavgac advised. It can take a year or longer to resolve issues that emerge. Instead, Tavgac has an open-door policy where employees are encouraged to voice concerns in real time. “Great ideas on culture [can] come from anyone in the organization,” he said.
2. Be clear in your communication.
Communication is also key as you implement new values or finetune existing ones, Cox said. But don’t simply focus on the benefits of these changes for the company. Employees don’t necessarily care about boosting efficiencies or cutting costs, she said.
“Always talk about things from an employee perspective,” advised Cox. Explain how the new value or vision will make their job better or support their career growth. Some employees might opt out, but that’s okay. Culture can be polarizing. “That means you’re not trying to serve everybody, but you’re really trying to pull in the people who are going to enjoy it the most and be the happiest and do their best work for the company,” she added.
Now Is the Perfect Time to Build a Strong Culture
As the COVID-19 pandemic continues, now is the perfect time for company leaders and HR professionals to take a hard look at their organizations’ values and double down on building up their culture, Keswin said. The global crisis has reshaped the way we work. Companies have moved to remote and hybrid workforces. Employee stress levels are at all-time highs. And many are leaving their jobs, sometimes in search of a corporate culture that matches their own personalities and values, and offers better work environments.
“We don’t always get these kinds of opportunities to start with a clean state,” Keswin said. “And this hybrid revolution really gives us an opportunity to reshape how we define and live our culture and shape how we run organizations.”
